I have been running a cheap box fan face down on a Corsi-Rosenthal Box for a year now with no problems. Anecdotal of course.

I would recommend power washing to remove any peeling paint and grime. Then sand/fill/sand the necessary spots. You can safely paint over the old paint as long as the old paint’s adherence to the wood is good and your new paint will stick to it. If in doubt start with a primer coat. The primer coat would probably be recommended for the patched areas anyway.

I don’t really know of a way that you can add insulation without taking up interior space, exterior space, or replacing the wall with more modern materials.

• What about the sides of the home not facing the street? Can you add an exterior layer of insulation and then new exterior siding to those walls?
• On the side facing the street, you could replace the stone wall with a different type of wall that was more thermally resistant. This would of course be a major undertaking.
• I am sure you have considered fully insulating the floor and ceiling as best you can.
• If rodents and or insects are a concern, look into Mineral Wool/Rockwool Insulation.